Immersion Corporation Reports Third Quarter 2012 Results

  Immersion Corporation Reports Third Quarter 2012 Results

Business Wire

SAN JOSE, Calif. -- November 01, 2012

Immersion Corporation (NASDAQ: IMMR), the leader in touch feedback technology
development and licensing, today reported financial results for the third
quarter ended September 30, 2012.

Total revenues for the third quarter of 2012 were $7.1 million, an increase of
10% compared with $6.5 million for the third quarter of 2011. Royalty and
license revenues of $6.4 million for the third quarter of 2012 were up 8% from
the same period last year. Net loss for the third quarter of 2012 was $(3.0)
million, or $(0.11) per share. This compares to a net loss of $(1.4) million,
or $(0.05) per share, for the third quarter of 2011. Adjusted EBITDA for the
third quarter of 2012 was $(1.6) million, as compared to $454 thousand in the
third quarter of 2011.

“We are pleased to report year-over-year revenue growth in the third quarter,
and we continue to see touch feedback become increasingly integral to the
mobile user experience,” said Immersion CEO Victor Viegas. “While our bottom
line reflects the timing of legal expenses during the period, we are pleased
with the manner and speed with which we are progressing through the ITC
process and projected timeline and remain committed to fully monetizing our IP
in a way that fairly values our technology. We continue to believe there is
potential for Immersion to monetize unrealized opportunity for Basic Haptics
in the current fiscal year, and restate our revenue guidance of $32 to $38
million for 2012 with positive Adjusted EBITDA. This forecast is predicated on
our existing base business supporting the lower end of the range and the
potential for Basic Haptics licensing revenue from litigation settlements and
other unlicensed companies providing the upside.”

As of September 30, 2012, Immersion’s cash, cash equivalents, and short-term
investments were $47.9 million, compared to $56.3 million as of December 31,
2011. During the third quarter of 2012, the Company used approximately $3.2
million to purchase 581,200 shares of its common stock, resulting in a total
of $5.2 million used to purchase 968,488 shares during the year to date.

Corporate Highlights

Recently:

  *Docomo launched the MEDIAS TAB UL N-08D Tablet by NEC, which is the first
    commercial implementation of Immersion's HD Reverb software. HD Reverb
    automatically enhances games, videos and music by monitoring audio output
    and creating complementary haptic effects in real time. The 7-inch tablet,
    which also includes Immersion's Integrator software, leverages
    next-generation HD Haptics technology using a high-fidelity piezo actuator
    combined with Immersion's TouchSense® 5000 software to deliver crisp,
    realistic and nuanced touch effects.
  *Popular casual gaming developer Handy Games incorporated Immersion's
    haptics into six of their apps during the quarter, introducing tactile
    effects to their millions of Android users.

Conference Call Information

Immersion will host a conference call with company management on Thursday,
November 1, 2012 at 2:00 p.m. Pacific time (5:00 p.m. Eastern time) to discuss
financial results for the third quarter ended September 30, 2012. To
participate on the live call, analysts and investors should dial +1
877-941-2068 at least ten minutes prior to the start of the call. A replay of
the call will be available until 11:59 p.m. Pacific time on November 8, 2012
by dialing +1 800-406-7325 and entering the passcode 4569142#. A live and
archived webcast of the conference call will also be available for 90 days
within the investor relations section of Immersion’s corporate Web site at
www.immersion.com.

About Immersion (www.immersion.com)

Founded in 1993, Immersion (NASDAQ: IMMR) is the leading innovator in haptic
technology; the company's touch feedback solutions deliver a more compelling
sense of the digital world. Using Immersion's high-fidelity haptic systems,
partners can transform user experiences with unique and customizable touch
feedback effects; excite the senses in games, videos and music; restore
"mechanical" feel by providing intuitive and unmistakable confirmation;
improve safety by overcoming distractions while driving or performing a
medical procedure; and expand usability when audio and visual feedback are
ineffective. Immersion's TouchSense technology provides haptics in mobile
phone, automotive, gaming, medical and consumer electronics products from
world-class companies. With over 1,200 issued or pending patents in the U.S.
and other countries, Immersion helps bring the digital universe to life. Hear
what we have to say at blog.immersion.com.

Use of Non-GAAP Financial Measures

Immersion reports all financial information required in accordance with
generally accepted accounting principles (GAAP), but it believes that
evaluating its ongoing operating results may be difficult to understand if
limited to reviewing only GAAP financial measures. Immersion discloses this
non-GAAP information because it is useful in understanding the company’s
performance as it excludes non-cash and other special charges that many
investors feel may obscure the company’s true operating performance. Likewise,
management uses these non-GAAP financial measures to manage and assess the
profitability of its business. Investors are encouraged to review the related
GAAP financial measures.

Forward-looking Statements

This press release contains "forward-looking statements" that involve risks
and uncertainties as well as assumptions that, if they never materialize or
prove incorrect, could cause the results of Immersion Corporation and its
consolidated subsidiaries to differ materially from those expressed or implied
by such forward-looking statements.

All statements, other than the statements of historical fact, are statements
that may be deemed forward-looking statements, including, but not limited to,
the statements regarding our expectations relating to monetization of Basic
Haptics intellectual property, expectations for fiscal 2012 revenues to be in
the range of $32 to $38 million, and the expectation as to our Adjusted EBITDA
for the full year and other statements regarding future growth and our
intellectual property.

Immersion's actual results might differ materially from those stated or
implied by such forward-looking statements due to risks and uncertainties
associated with Immersion's business, which include, but are not limited to,
potential and actual claims and proceedings, including litigation involving
Immersion’s intellectual property; delay in or failure to achieve commercial
demand for Immersion's or its licensees’ products; a delay in or failure to
achieve the acceptance of force feedback as a critical user experience;
unexpected difficulties in transitioning to a pure IP licensing model and in
monetizing the patent portfolio; the commercial success of applications or
devices into which Immersion's technology is licensed; potentially lengthy
sales cycles and design processes; unanticipated difficulties and challenges
encountered in development efforts; potential restructuring charges;
unexpected costs; failure to retain key personnel; competition; the inherently
uncertain nature of litigation which makes future outcomes and timing
difficult to predict; the impact of global economic conditions and other
factors. Many of these risks and uncertainties are beyond the control of
Immersion.

For a more detailed discussion of these factors, and other factors that could
cause actual results to vary materially, interested parties should review the
risk factors listed in Immersion's most recent Quarterly Report on Form 10-Q,
which is on file with the U.S. Securities and Exchange Commission. The
forward-looking statements in this press release reflect Immersion's beliefs
and predictions as of the date of this release. Immersion disclaims any
obligation to update these forward-looking statements as a result of
financial, business, or any other developments occurring after the date of
this release.

Immersion, the Immersion logo, TouchSense, HD Haptics and Reverb are
trademarks of Immersion Corporation in the United States and other countries.
All other trademarks are the property of their respective owners.

The use of the word "partner" or "partnership" in this press release does not
mean a legal partner or legal partnership.

(IMMR – C)



Immersion Corporation
Condensed Consolidated Balance Sheets
(In thousands)
                                                             
                                                September 30,     December 31,
                                                2012              2011
                                                (Unaudited)       (1)
ASSETS
Cash and cash equivalents                       $    13,889       $  7,298
Short-term investments                               33,985          48,987
Accounts and other receivables, net                  1,402           1,487
Inventories                                          359             423
Deferred income taxes                                215             215
Prepaid expenses and other current assets           773            479     
             Total current assets                    50,623          58,889
                                                                  
Property and equipment, net                          1,426           1,737
Intangibles and other assets, net                   15,447         14,053  
                                                                  
TOTAL ASSETS                                    $    67,496       $  74,679  
                                                                  
LIABILITIES
Accounts payable                                $    1,717        $  365
Accrued compensation                                 2,412           2,830
Other current liabilities                            2,478           2,054
Deferred revenue and customer advances              4,651          4,120   
             Total current liabilities               11,258          9,369
                                                                  
Long-term deferred revenue                           10,999          13,229
Deferred income tax liabilities                      215             215
Other long-term liabilities                         584            245     
                                                                  
TOTAL LIABILITIES                                    23,056          23,058
                                                                  
STOCKHOLDERS’ EQUITY                                44,440         51,621  
                                                                  
TOTAL LIABILITIES &
STOCKHOLDERS’ EQUITY                            $    67,496       $  74,679  
                                                                  
(1) Derived from Immersion’s annual audited consolidated financial statements.



Immersion Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
                                                             
                           Three Months                Nine Months
                           Ended September 30,         Ended September 30,
                           2012         2011           2012         2011
                                                                    
Revenues:
Royalty and license        $ 6,371      $ 5,875        $ 21,386     $ 20,110
Product sales                529          345            1,145        1,892
Development contracts       242        275          778        943    
and other
Total revenues              7,142      6,495        23,309     22,945 
                                                                    
Costs and expenses:
Cost of revenue              273          192            802          913
Sales and marketing          1,632        1,643          5,072        5,402
Research and                 2,088        2,183          6,406        6,525
development
General and                  5,750        3,195          14,882       9,367
administrative
Amortization and
impairment of               337        324          1,071      1,016  
intangibles
Total costs and             10,080     7,537        28,233     23,223 
expenses
                                                                    
Operating Loss               (2,938 )     (1,042 )       (4,924 )     (278   )
Interest and other          66         58           144        172    
income
                                                                    
Loss from continuing
operations before            (2,872 )     (984   )       (4,780 )     (106   )
provision for income
taxes
                                                                    
Provision for income        (118   )    (428   )      (737   )    (1,289 )
taxes
                                                                    
Loss from continuing         (2,990 )     (1,412 )       (5,517 )     (1,395 )
operations
                                                                    
Discontinued
operations:
Gain on sales of
discontinued                 -            -              153          61
operations
                                                                 
Net Loss                   $ (2,990 )   $ (1,412 )     $ (5,364 )   $ (1,334 )
                                                                    
Basic and diluted net
loss per share
Continuing operations      $ (0.11  )   $ (0.05  )     $ (0.20  )   $ (0.05  )
Discontinued               $ 0.00      $ 0.00        $ 0.01      $ 0.00   
operations
Total                      $ (0.11  )   $ (0.05  )     $ (0.19  )   $ (0.05  )
Shares used in
calculating basic and       27,658     28,918       27,885     28,595 
diluted net loss per
share

                                                             
                                                                    
Immersion Corporation
Reconciliation of GAAP Net Income to Adjusted EBITDA
(In thousands)
(Unaudited)
                                                                    
                           Three Months                Nine Months
                           Ended September 30,         Ended September 30,
                           2012        2011           2012        2011
                                                                    
GAAP Net Loss              $ (2,990 )   $ (1,412 )     $ (5,364 )   $ (1,334 )
                                                                    
Interest and other           (66    )     (58    )       (144   )     (172   )
income
Provision for income         118          428            737          1,289
taxes
Depreciation and             163          232            490          717
amortization
Amortization and
impairment of                337          324            1,071        1,016
intangibles
Stock-based                  808          940            2,346        2,705
compensation
Discontinued                -          -            (153   )    (61    )
operations
Total adjustments            1,360        1,866          4,347        5,494
                                                                    
Adjusted EBITDA            $ (1,630 )   $ 454         $ (1,017 )   $ 4,160  

Contact:

Media Contact:
Edelman
Reagan Crossley
+1 650.762.2955
reagan.crossley@edelman.com
or
Investor Contact:
The Blueshirt Group
Jennifer Jarman
+1 415.217.5866
jennifer@blueshirtgroup.com
 
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